The Consumer Protection Act will impact each and every transaction in South Africa where a consumer is involved anywhere in the chain from farm to fork.  The purpose of the Consumer Protection Act, for those of you who don’t already know, is to protect private individuals who are consumers, irrespective of their status or income, from exploitation of any sort by business, as well as assuring them of safe, good quality products on which they can rely and the labelling and advertising of which they can believe in and trust.  In addition, the legislator saw fit to throw in small businesses having an annual turnover of below R 2 million at the time of the transaction to be treated as consumers and, if you are a Franchisor, it does not stop there and a Franchisee or a prospective Franchisee, regardless of their status or turnover, is granted rights against the Franchisor with respect to various contractual and fairness issues in their relationship.

In the writer’s opinion, probably the most far reaching impacts of the Act are the consumer’s right to safe good quality goods which are fit for purpose regardless of their price.  Never again shall a retailer be heard to say “its cheap, what did he expect?”.  All products regardless of their price point must meet the safety and quality requirements of this law in addition to that prescribed in any other law such as the Foodstuffs, Cosmetics and Disinfectants Act, the Agricultural Products Standards Act, R918 under the Health Act, and the like.

If this warranty of quality and safety is not met then the consumer can simply return the product for a refund or exchange, at the risk and expense of the supplier, and the choice of a refund or an exchange is solely upto the consumer.  The importer, manufacturer, distributor and retailer each provide this warranty and the consumer cannot be referred from pillar to post .  Thus, if a consumer approaches a wholesaler regarding a replacement he cannot be referred back to the retailer and likewise the retailer cannot refer a consumer onward to the manufacturer or importer, although the defective product may very well be sent to the importer or a manufacturer for a report.  Off-course this has to happen very rapidly and a consumer is entitled to feedback within a maximum of 10 or 15 days or so failing which the consumer may simply escalate their complaint to the Consumer Commission for evaluation and investigation.  In some cases this could even lead to a referral by the Commission of the complaint to the National Consumer Tribunal for a hearing and if at the hearing the supplier is found guilty of a prohibited activity under the Consumer Protection Act then a fine of upto R 1 000 000 or 10% of turnover may be levied.

Going further, if that unsafe or defective product, such as an adulterated foodstuff with a hazardous additive, such as melamine, or an undeclared allergen such as soy in a yoghurt or condensed milk, has caused anyone to suffer any harm, or a product has caused any damage to property, then the importer, producer, distributor, and retailer, will be held jointly and severally liable therefor irrespective whether they were negligent or not.  This is termed strict liability or no fault liability and, as can be gleaned from the terminology, liability arises without fault on the part of anyone in the supply chain as long as the product was unsafe, defective or hazardous, or there were insufficient instructions regarding the storage or preparation of the dairy product and warnings on the product of harm or damage which may follow the use or incorrect use thereof, for example if it is not stored under the correct temperature conditions.  In short, if the product causes harm or damage someone in the supply chain will almost inevitably be liable to pay the consumer for any harm or damage suffered by them.

Any number of such situations arise daily in the food industry at the consumer level and whereas in the past these were often solved cheaply with a voucher and an apology, and rarely a small sum of money, going forward consumers will no longer be fobbed off by the voucher and will insist on real compensation for harm, inconvenience, loss of earnings, medical expenses, and even future care and medical expenses in the most extreme cases.

It is not unusual for readers at this stage to think aloud to themselves that a consumer could never afford to sue them, after all how could an average consumer afford the quality lawyers that a multi-national employs?  How would the consumer even know how to start such a case?  Fortunatley for the consumer, and unfortunately for the company which is liable for the harm, the Consumer Protection Act provides a simplified redress mechanism whereby consumers will lodge a complaint with an ombud, where there is one for your industry, or directly with the Commission, who will then investigate and pursue matters with merit on behalf of the consumer upto the point where liability has been determined by the Tribunal.  A court hearing arguments as to how much damages a consumer has suffered cannot question the finding on liability by the Tribunal and this is fundamental to the protection that a consumer has under this Act.

The need for clear unambiguous instructions and warnings of the fact and nature of risks posed by a dairy product should not be forgotten as it is one of the main sources of consumer claims in the USA where consumers have successfully held manufacturers liable for harm suffered as a result of unclear or insufficient instructions or warnings. This has lead to the “warning:  coffee hot and may burn you” culture of product warnings and instructions.  We often laughed at stories from the USA on awards to consumers for claims such as setting a vehicle to cruise control and going to the back to make coffee which results in an accident as it is cruise control and not auto-pilot, however, these types of claims, even if not the same in magnitude, are coming here soon.

Thus, a consumer who consumes a yoghurt or cream product which has Listeria or an undeclared allergen such as soy, or has been adulterated by melamine or some other hazardous substance, will claim against the retailer who sold him the product, the manufacturer who produced it, as well as the ingredient supplier who supplied the milk without ensuring it is safe for consumers.  In the proceedings the retailer may well have a defence under the Consumer Protection Act  and may be held not to be liable thereby leaving the ingredient supplier and the manufacturer liable for the harm caused.  There may even be a class action lawsuit on behalf of a whole class of harmed consumers.

The scope of the Consumer Protection Act reaches far beyond that discussed above and includes topics such as mandatory product recalls where products are unsafe or may cause harm or damage to property, deceptive and misleading marketing and labelling practices, overselling and poor delivery and other services, failure to comply with each of these leading to a possible finding that a prohibited activity has been engaged in and a fine as described above.

The writer strongly believes that the Consumer Protection Act is a law which the Dairy Standards Agency can use as a powerful tool to bring manufacturers into line where these manufacturers produce products that do not comply with the Dairy regulations or intentionally adulterate or dilute milk and other products.  Whereas in the past the DSA only had persuasive powers and would have to rely on the Department of Agriculture to enforce the regulations following on a complaint by the DSA or a consumer, or for a competitor to bring the matter before the Advertising Standards Authority, the Consumer Protection Act provides a mechanism whereby the DSA can be instrumental in the prosecution  of delinquent importers and manufacturers through the National Consumer Commission and the outcomes for such delinquents may be dire with the fines which may be imposed being higher by several factors than those under the Dairy regulations.

As can be clearly seen from the above, there is a paradigm shift in business in South Africa the Consumer Protection Act and consumers’ rights should be taken as seriously, if not more seriously, as Competition Law.  You should also by now realise that you need lawyers who understand the science and engineering of the industry in which you operate, especially where product quality  and safety, and the new no fault product liability, is concerned and it is then that you will be glad that you read this article by Janusz F Luterek, Pr.Eng  of Hahn & Hahn attorneys, whose slogan is “Are your lawyers engineers too?  We are.”.  Visit us at www.hahnlaw.co.za This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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